What changed on 1 January 2026

The Nigeria Tax Act 2025 and its companion Acts took effect on 1 January 2026. They did not amend the old law; they replaced it. Below is what moved, in the order most people notice it.

If you earn a salary

The rate bands were rewritten. The first ₦800,000 of chargeable income is now taxed at 0%. Above that, 15% applies to the next ₦2.2m (up to ₦3m), then 18% up to ₦12m, 21% up to ₦25m, 23% up to ₦50m, and 25% on anything above ₦50m. The old regime started charging at 7% from the first naira and topped out at 24%.

The Consolidated Relief Allowance is gone. Under the old rules the CRA gave you the higher of ₦200,000 or 1% of gross income, plus 20% of gross income, deducted before tax. From 2026 it does not exist.

Rent relief replaced it — but only if you pay rent. You can deduct 20% of your annual rent, capped at ₦500,000. If you own your home, live with family, or your employer houses you, there is no equivalent relief. That is a real loss for those people: they lost the CRA and got nothing in its place. The old vs new regime comparison will show you which side of that line you fall on.

Minimum tax on individuals is abolished. The old regime charged 1% of gross income where that exceeded your computed liability, which is why low earners still paid something. From 2026, if the computation says nil, you owe nil. Combined with the 0% band, most people earning at or below the ₦70,000 monthly minimum wage now pay no income tax at all — check with the tax-exempt eligibility checker.

Gratuity became taxable. It was fully exempt before 2026. It is not now. Compensation for loss of office moved the other way, with the exemption rising from ₦10m to ₦50m. If you are retiring or being let go, the gratuity calculator shows both.

If you run a company

The small-company turnover threshold rose from ₦25m to ₦50m for income tax — but a new test came with it. You must also hold no more than ₦250m in fixed assets, and professional services firms are excluded from small-company status entirely, whatever their turnover.

The 20% medium-company band is gone. The old three tiers (0% / 20% / 30%) became two. You are either a small company paying 0%, or you pay 30%.

Watch the ₦50m/₦100m trap. The Nigeria Tax Act sets ₦50m as the small-company cap for income tax. The Nigeria Tax Administration Act sets ₦100m as the small-business cap for VAT. Both are gazetted. A company turning over ₦75m is therefore VAT-exempt and pays 30% companies income tax. Most summaries quote ₦100m for both and are wrong. Am I a small company? works through it.

A 4% development levy arrived, charged on assessable profit — before capital allowances, not after. It consolidates four levies that were charged separately: Tertiary Education Tax at 3%, the NITDA levy at 1%, the NASENI levy at 0.25% and the Police Trust Fund levy at 0.005%. Small companies and non-resident companies are exempt. See the development levy calculator.

A 15% minimum effective tax rate now applies to large companies. Read the caveats on the minimum ETR checker before you rely on the trigger — the sources disagree about it.

If you charge VAT

The rate did not change. It is still 7.5%. Reports that it rose are wrong.

The registration and filing threshold rose from ₦25m to ₦100m of turnover, with a ₦250m fixed-asset cap alongside it.

Input VAT recovery broadened, and this is the change worth money. Before 2026 you could only recover input VAT on goods that physically went into what you sold. From 2026 you can recover it on services, overheads, fixed assets and capital expenditure too. If you are still applying the old restriction you are handing money to the revenue. The VAT return preparer applies the new rules.

If you sell assets

Companies now pay capital gains tax at 30%, the companies income tax rate, up from a flat 10%. Individuals are taxed at their personal income tax band rates rather than a flat 10%, so a large gain can reach 25%.

The share exemption changed shape. Under the old rules a disposal was chargeable once your proceeds over 12 months reached ₦100m, full stop. From 2026 there are two tests: proceeds over 12 months above ₦150m and a gain above ₦10m. Both must be breached before the gain is chargeable. See the capital gains on shares tool.

Crypto and other digital assets are expressly chargeable from 2026. They were not before. The NRS has not yet issued guidance on valuation or cost basis.

Everything else worth knowing

Capital allowances went straight-line. The initial allowance — 50% in year one on plant and vehicles, 15% on buildings — is gone. You now claim the annual rate by class: 10%, 20% or 25%. And an asset on which VAT or import duty was not paid cannot be claimed at all.

Penalties got heavier. Late filing costs ₦100,000 for the first month of default and ₦50,000 for each month after, against ₦25,000 and ₦5,000 before.

If a number here matters to your position, check it against the rate reference, which reads every figure straight from our configuration, and read the disclaimer first.